Markets Wired

Marketers who made false and deceptive claims that a device would cause consumers to lose weight by applying electronic stimulation to their abdominal muscles have agreed to pay $7 million to settle an action brought by the Federal Trade Commission to obtain consumer redress. Consumers purchased more than 700,000 Ab Force belts and accessories.

The settlement follows a long legal battle that included a finding by an administrative law judge (ALJ) in favor of the FTC; an appeal of the ALJ’s decision to the Commission; and an appeal of the Commission’s decision to the Fourth Circuit Court of Appeals. The FTC filed an administrative complaint in September 2003 alleging that Telebrands Corporation, TV Savings, L.L.C., and their principal Ajit Khubani marketed the Ab Force belt by making the following unsubstantiated claims, that the product: 1) caused loss of weight, inches, or fat; 2) created well-defined abdominal muscles; and 3) was an effective alternative to conventional exercise. The complaint charged that the advertisements were false and deceptive in violation of Sections 5 and 12 of the FTC Act.

In September 2004, the ALJ issued an initial decision holding that the claims made in the ads were false and deceptive. In 2005, the Commission upheld the ALJ’s ruling. The defendants appealed the ruling to the Fourth Circuit Court of Appeals, which upheld the Commission’s decision in August 2006. Because the FTC Act allows the agency to seek consumer redress in U.S. district court after a litigated administrative decision if the underlying conduct is dishonest or fraudulent, the FTC filed an action in 2007 asking the U.S. District Court for the District of New Jersey to order the marketers of Ab Force to provide monetary redress to consumers.

The Commission vote authorizing the staff to file the agreed-upon final settlement was 4-0. It was filed in the U.S. District Court for the District of New Jersey on December 23, 2008.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Telebrands Corp NR.wpd)
(FTC File No. 072-3076)